Fracking works by sending a drill 10,000 ft into the earth to a shallow layer of rock, called shale.

A pump then fires millions of
gallons of water, sand and chemicals at the earth to create small
explosions. The splitting rock releases gas which escapes up a pipe to
the surface.

An estimated 300 trillion cubic feet
of untapped shale gas lies under two-thirds of the country — enough to
supply Britain’s energy for 120 years.

So far, the only company with a permit to dig in the UK is Cuadrilla. But when its engineers were drilling five miles east of Blackpool last year, a series of mini earthquakes occurred.

The Government suspended all fracking until the Department for Energy and Climate Change had investigated the dangers.

Eighteen months later, shale gas extraction has been given the all-clear — albeit under strict new rules.

Any drilling must stop immediately if tremors larger than 0.5 magnitude are registered — equal to a hand grenade exploding.

However, concerns remain —
particularly over toxic fracking chemicals leaking into drinking water
supplies. The huge water wastage will also cause consternation if there is a hosepipe ban next year.

Wells in Colorado in the U.S., for example, guzzle enough water to supply a whole city for a year.

Other worries include acres of countryside being turned into an industrial wasteland plagued by noisy lorries.

Environmentalists complain that the vast amounts of energy used get only a little extra back. They want money spent on wind, wave and solar power, instead of a gas which will one day run out.

And, for ordinary investors, cashing
in on fracking might not be easy. Patrick Connolly, an independent
financial adviser at wealth manager AWD Chase de Vere, says: ‘This is so
new that there are only a handful of shares ordinary investors can buy.

‘However, I would urge immense caution — it is extremely risky to invest in small fracking firms at this stage.’

Most UK producers — including
Cuadrilla — are privately owned and off-limits to ordinary savers. One
of the few with shares you can buy is iGas Energy, which is listed on
the Alternative Investment Market (Aim) for small start-ups.

Last week’s announcement pushed up
its price 8 pc. A single investment in such a comparatively small
company at this early stage could be very risky indeed.

An alternative is BG Group — the
exploration firm which was once part of British Gas — but fracking plays
only a minor role at the FTSE-100 firm.Probably a better investment
opportunity lies with companies with links to fracking — for example,
Weir Group, which makes the pumps and drill parts.

The safest way to invest is a fund that will hold a mixture of shares to spread the risk.

Tim Cockerill, head of investment at
wealth manager Rowan Dartington, says: ‘A fund has a manager monitoring
the newsflow to buy and sell when the time is right. This is vital in a
young industry such as fracking — and hard for most savers to do on
their own.’

Weir Group is the largest holding in
the AXA Framlington UK Select Opportunities fund, which has turned
£10,000 into £13,535 in five years, according to data analyst
Morningstar.

A more direct investment is Artemis
Global Energy — a relatively new fund. This higher-risk fund allows
savers to benefit from a fracking boom across the globe, Mr Hollands
says.

In the U.S., for example, shale gas production has leapt from 0.3 trillion cubic feet in 1996 to 7.8 trillion last year.

The Artemis fund invests £3.30 in every £100 of savers’ money in Occidental Petroleum, the largest gas producer in California.

It has turned £10,000 into £10,201
over the past year, with money also spread to African and Norwegian oil
explorers and U.S. petrol companies such as Exxon and Hollyfrontier.